Day 3 Arguments
Tribunals and the Finance ActApril 2nd 2019
A 5-judge Constitution Bench reserved judgment in the matter pertaining to the functioning of central tribunals. Tribunals are quasi-judicial institutions set up to resolve subject-specific disputes. They are granted procedural flexibility as they are not strictly bound by the Code of Civil Procedure nor the the Code of Criminal Procedure.
The Bench comprises CJI Ranjan Gogoi, Sanjiv Khanna, Deepak Gupta, DY Chandrachud and NV Ramana JJ.
The petitioners have raised two central issues. First, they have submitted that the Central Government has failed to act on previous directions. These directions called for the establishment of a central nodal agency to administer all central tribunals and further, to increase the rate at which vacancies were being filled. Second, the petitioners have argued that the Finance Act, 2017, which governs central tribunals, has several issues with it. They allege the following:
- It was incorrectly designated as a money bill.
- Part XIV violates the separation of powers — violates the independence of the judiciary and suffers from excessive delegation
- Part XIV is inconsistent with the Supreme Court’s Madras Bar Association (2010) judgment.
In the previous hearing, the Court heard Mr. Arvind Datar on behalf of the petitioners and Attorney General KK Venugopal on behalf of the Union. They presented arguments for and against the certification of the Finance Act, 2017 as a money bill.
Attorney General KK Venugopal
The Attorney General continued his arguments from the previous hearing. First, he responded to Mr. Datar’s argument that the Finance Act, 2017 should not be a money bill by virtue of Article 110(2) of the Constitution. Article 110(2) specifies that a bill cannot be deemed a money bill if it only pertains to salaries and pensions (“fees for services rendered”). Mr. Datar had argued that the 2017 Act, in particular Part 14, seeks to disguise itself as a money bill with the inclusion of provisions pertaining to salaries and pensions. To counter this, AG Venugopal established that Article 110(2) is an exception to Article 110, by citing various precedents (Rohitash Kumar and Kush Saigal)
Next, he argued that salaries and pensions from tribunals legitimately make the Finance Bill 2017, a money bill under Article 110. He argued that payments and salaries are “matters incidental” to the clauses which define what a money bill is. Article 110(1)(g) says that “matters incidental” to clauses (a) through (f), allow for a bill to be designated as a money bill. Hence, he argued that payments not excluded by Article 110(2) will necessarily find a place under Article 110(1)(g).
He established that as per Article 266 of the Constitution all revenues to the Government of India go to the Consolidated Fund of India. Note, under Article 110(1), if a bill pertains to funds received on behalf of the Consolidated Fund of India, the bill may be designated as a money bill.
He cited the Aadhaar judgment as precedent. Recall that the majority opinion in Aadhaar had upheld the passage of the Aadhaar Act as a money bill. The Act was designated as a money bill because it aimed to deliver subsidies and/or benefits using funds managed by the Consolidated Fund of India.
Subsequently, the Attorney General addressed the question of excessive delegation. The petitioners have claimed that the Finance Act, 2017 suffers from excessive delegation because it vests the executive with powers that are essentially legislative in nature.
AG KK Venugopal began by citing the All India Services (AIS) Act, 1951, wherein all rule making power is left to the central government. In other words, he offered the AIS as a counter-example, which has not been struck down on the ground of excessive delegation, despite the fact that it grants the executive all rule making power. He emphasised that when the AIS was challenged on grounds of excessive delegation, it was sustained on the ground that all rules promulgated by the central government must be brought before the Parliament.
After KK Venugopal concluded his arguments on the question of excessive delegation, the Bench discussed whether administrative and technical members of tribunals are the equivalent of High Court judges. The Attorney General briefly suggested that the service of judges and persons appointed to tribunals should be reviewed every five years. CJI Gogoi responded by saying that five years is too long of a period. In response, the AG amended his suggestion to a review every three years.
Finally, AG KK Venugopal concluded with a discussion on how uniformity could be maintained across tribunals. He requested the Bench to decide whether uniform principles should govern the tribunals and its appointed members. For example, should there be a uniform age of superannuation?
Mr. Arvind Datar
Mr. Arvind Datar began his rejoinder by returning to the money bill question. He emphasised that the Aadhaar judgment did not resolve whether the decision of the Lok Sabha speaker is subject to judicial review (see contradiction between para 453 & 464).
He objected to the AG’s reliance on the Aadhaar Act as a precedent for legitimizing the designation of the Finance Act 2017 as a money bill. He submitted that the Aadhaar Act does not specify which clause under Article 110 certifies it as a money bill.
He suggested that the Finance Act, 2017 (originally Finance Bill) was passed as a money bill in order to by-pass the Rajya Sabha. He submitted that the Finance Minister added 34 amendments to the Finance Bill after Rule 18 of the Lok Sabha Rules was suspended.
He referred to Article 110(2). He said that the mere insertion of a provision regarding the payment of salaries by the Consolidated Fund, could not make the Bill a money bill, as the other provisions have nothing to do with Article 110.
Next, Mr. Datar questioned the argument that the Lok Sabha Speaker’s certification of a bill as a money bill is final. He said that the Court can exercise its powers of judicial review to see if a bill has been wrongly been certified as a money bill merely to bypass the Rajya Sabha’s scrutiny.
Finally, he submitted before the Court that the functioning of tribunals performing a judicial function must remain independent of the control of various Ministries.
With this, the matter concluded and the Supreme Court reserved judgment.